Trade talks with China collapse: “This has all the makings of a complete disaster that could lead the stock market to crater this week”
Trade talks with China collapse: “This has all the makings of a complete disaster that could lead the stock market to crater this week” by Michael Snyder for The Economic Collapse Blog
Chaos has returned to global financial markets, and it does not appear that there will be an easy fix this time. For the first four months of 2019, the mainstream media told us over and over again that a great deal of progress was being made on a trade deal with China and that negotiations would soon reach a final conclusion, but now it has become clear that those news reports were fake news. For a variety of reasons, the Chinese have been slow playing negotiations all along. Once they got the Trump administration to suspend the implementation of any new tariffs while negotiations were ongoing, the Chinese no longer had any urgency to reach an agreement. In fact, if the Chinese could have run out the clock all the way to the 2020 election, they surely would have done so. They would very much prefer to negotiate with someone else, and I think that President Trump has finally figured out that he was being played. On Sunday, in a very angry two part tweet Trump announced that he is going to slap China with huge new tariffs…
For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars….
…of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!
In response to Trump’s angry tweets, the Chinese suggested that they may cancel this week’s negotiations…
Chinese Vice Premier Liu He had planned to bring a large delegation to Washington on Wednesday to hash out a trade deal — and there’d been talk in recent days that something resembling a deal could result. Instead, two sources briefed on the talks said the Chinese side may back out of this week’s negotiations.
That was pegged to Trump’s new threats, they said, which abandon a six-month truce after Beijing waffled on some previously discussed commitments.
And according to reporter Edward Lawrence, the negotiations have now officially been canceled…
Chinese Vice Premier Liu He has cancelled his trip to Washington this week for trade talks following a tweet by President Donald Trump threatening more tariffs because the talks have moved too slowly. #China #Trade #Breaking
Needless to say, global financial markets did not respond well to this news. For most of the year, hope that a trade agreement was imminent had lifted stocks, but now that hope appears to be gone.
In Asia, the major Chinese markets were all down more than 5 percent overnight…
Asia Pacific stocks tumbled in Monday morning trade following a re-escalation in U.S.-China trade tensions as President Donald Trump declared an impending increase in tariffs rates on $200 billion of Chinese goods.
The mainland Chinese markets plunged in morning trade. The Shanghai composite, Shenzhen composite and Shenzhen component all plunged more than 5% each.
And oil prices immediately began falling as well…
Oil prices also saw sharp declines in the morning of Asian trading hours, with U.S. crude futures dropping 2.34% to $60.49 per barrel. For its part, international benchmark Brent crude futuresalso declined 2.09% to $69.37 per barrel.
Unfortunately, this is likely to be far more than just a temporary setback for the markets. Unless a trade deal can be salvaged somehow, things are likely to get very “interesting” quite rapidly.